I don;t know the answer, but I would assume that the loan mod might depend on assessing the borrowers capability to pay (if they desired) and at least disclosing retirement account balances is probably part of that process. If I were the borrower trying to mod, I would not sacrifice my 401k (the main reason being that a large chunk would be lost to taxes and penalties).
Either way, be prepared to wait a long time for the outcome.
